Net Neutrality Repealed: What it Means for Business

As of December 14, 2017, the Federal Communications Commission (“FCC”) repealed the so-called net neutrality regulations in a 3 to 2 vote along party lines. But what does this mean and how may this decision affect you or your business?

To be honest, it is too early to tell if derailing the short-lived regulation of internet providers will significantly impact the casual user’s internet experience, but there are some issues which should cause companies and individuals alike to be wary.

What is Net Neutrality?

Net Neutrality defines the concept that all content transmitted over a phone company or cable company’s network are to be treated equally and without preference. During the Obama administration, the FCC adopted rules to protect net neutrality.[1] These 2015 rules reclassified broadband Internet service as a form of telecommunications, allowing the FCC to regulate providers of Internet services, e.g., Comcast, Cox, AT&T, as common carriers under the Communications Act. The rules also aimed at specifically prohibiting certain “non-neutral” leaning actions by the internet service providers such as:

blocking (providers cannot discriminate against any lawful content),

throttling (providers cannot slow data transmission based on content), and

These rules were, at least somewhat, in contrast to case law at the time. For example, in Verizon v. F.C.C., the D.C. Circuit held that anti-blocking and nondiscriminatory rules were unlawful because they treated internet service providers as common carriers in violation of the Communications Act.[3] At the time, telecommunications companies were treated differently than common carriers like the telephone companies. The 2015 FCC rules circumvented this issue by expressly making internet service providers common carriers. Without the 2015 FCC rules, cases like Verizon are going to become relevant again.

Should the average business owner be concerned?

Maybe. By dismantling the net-neutrality rules, internet service providers are no longer regulated as common carriers. In theory, the service providers can demand premiums for fast or substantial access to web-based services. This, of course, may have immediate implications for popular streaming services such as HBO, Netflix, and news outlets. These companies are likely to pass along any increase cost to the ultimate users, so it may not affect their bottom line. Some argue that the common mid-sized business is unlikely to feel much effect as typical webpages do not require substantial bandwidth. However, modern business is intrinsically tied to Internet based services. Although a company may not be part of e-commerce, it may rely upon every day services for billing, time keeping, or communications that could be affected.

One thing is for certain: we should not expect Net Neutrality to be reinstated any time soon. The Trump administration successfully pushed for its repeal and has shown no sign of recanting. Past Congressional attempts to regulate the area have not been fruitful, and it is unlikely that any new legislation will fare better in the current political climate.

Many groups have already voiced their intent to sue the FCC over the new regulations: the Internet Association (representing tech firms like Google and Facebook), public interest groups, and the New York Attorney General, to name a few. But, whether or not they will be successful is far off and yet to be seen. The concept of net neutrality issue is no stranger to litigation. In fact, the net neutrality regulations were borne out of case law deeming the regulations of non-common carriers unconstitutional. Because the common carrier classification of Internet service providers was repealed, precedential case law implies that any attempts to regulate these companies in the future would be unconstitutional. Only time and, unfortunately, more lawsuits will tell if Internet service providers will be able to cherry pick users and broadband speeds for a fee. We will continue to monitor this progression and provide updates as it unfolds.

About the Firm

With more than 150 attorneys in Baton Rouge, New Orleans, Shreveport, Lake Charles, and now Houston, Kean Miller is one of the largest full-service law firms based in Louisiana. We serve the legal needs of the people, businesses, and industries that drive the Louisiana. We have particular dedication to serving Fortune 500 companies with significant operations in the South, providing them with legal resources focused on growth. From the courtroom to the boardroom, our people provide creative solutions, unique strategies, and unparalleled value that allows our clients to perform at the highest level.
Learn more.